1) builder cannot offer possession of flat until OC is issued
2) wait for OC to be issued then only purchase flat from builder
3) once building construction is complete and OC is issued then on purchase of flat GST is applicable
GST charges
I am about to register a flat in lonavala area near Pune. It is a ready to move in flat but builder is asking me to pay 12% GST because he claims he has applied for OC but has not got it. About 11 customers who brought other flats in the same building have already moved in but were not given OC. There are some other buildings being constructed in the same society which are under construction but the building I have bought the flat in, is occupied with other tenants. Please let me know if I have to pay GST during registration, just because of the builders fault of not taking OC on time. I have read a few places that GST does not apply to ready to move in flats. Thanks
Asked 8 years ago in Property Law
Religion: Muslim
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8 Answers
If the constitutional work was finished before the GST regime came into being, you have no liability to make payments.
So insist on having the relevant rules in support thereof.
The OC similarly has no bearing with the paymentof GST, if applicable, by the flat owners.
If the builder harasses more you may consider approaching consumer forum.
If the construction (constitutional) work was completed before the roll out of the GST then you will not have to pay any GST on purchase of the property. If still the builder is asking for GST aask him to supply you all the relevant rules.
OC has no relation to the GST.
Regards
If the builder continues to harass you, serve him with a legal notice and move to the consumer forum.
Regards
completed properties for which an occupancy certificate has been secured from a municipal body are exempted from GST.
A perception has gained ground in the Indian housing market that the Goods and Services Tax (GST), is only applicable to under-construction projects and hence, ready-to-move-in apartments are exempt from the GST. However, the tax calculations under the new regime, for the real estate market, are not so simple.
For example, the GST on under-construction projects will be charged to home buyers on the sale price but the credit can be availed by the developers, only on the cost of construction. As the builder will have to pay the GST on the full project and the input availed is only on the construction cost, there may be a gap that is no less than 30 per cent. Consequently, whether you opt for an under-construction property or ready-to-move-in unit, the developer will hike the prices in that proportion, to make sure this gap is bridged.
Ready-to-move apartments will have no GST but the developer will only get input credits on construction costs.
Developers will collect and pay GST on the cost of the project.
Apartments may become costlier, due to GST compliances.
The premium charged for ready apartments, will nullify any benefits from the GST.
Even when service tax was not applicable on ready-to-move-in properties, developers were escalating the price during possession. With the GST regime, buyers will not benefit, as the developers will escalate the prices due to GST compliance during the construction stage
The builder has applied for Completion Certificate but has not got it but there are buyers who have already moved into the building in other flats. Occupancy Certificate or First Occupation'are mentioned as criteria for GST exemption, but builder is saying there is no clarity on what 'First occupation' means. One consultant told the builder that an electricity bill in the name of any of the existing occupants will constitute as evidence for first occupation, but the builder is not willing to accept that. What can the builder produce as a proof of 'First Occupation' ?
Asked 8 years ago
1)the expression ‘first occupation’ is not defined in the Act
2)even if the completion certificate has
not been received by the builder, if first occupancy in the premises has been
taken place, builders may not be required to charge GST if entire consideration
is received after first occupation.
3) proof that flat owners have signed the possession letter and taken delivery of flat would be proof of first occupation
After patiently waiting for the construction to be complete, you finally register the property and take possession of your flat. But what if your dream home is declared unauthorised, and you are evicted by the authorities? This is not as far-fetched as it sounds. This nightmare could turn into reality without a crucial link in the property sale process - the Occupancy Certificate (OC).
A Completion Certificate (CC) is issued only after the construction meets other building standards like distance from the road, the height of the building, and rainwater harvesting system. A CC alone cannot legalise occupation; the OC is a must.
if buyers are not careful about getting the OC, they may face the following repercussions:
• In the absence of a valid OC, your building can be demolished as it can be classified as an unauthorised structure.
• The OC is crucial while applying for a home loan or loan to purchase a resale flat. If you wish to sell or hypothecate the property after a lapse of time, you will not be able to do so without a valid OC.
• The water connection, sanitary connection or electricity supply can be disconnected in the absence of an OC.
By keeping the ongoing projects under the purview of RERA even the existing buyer who hasn't got possession is benefited. "Excluding ongoing projects from the ambit of RERA would have served no purpose at all. By including ongoing projects at least there is hope for those customers who have purchased in these projects and are stuck for one reason or another